SML - Synlait Milk Ltd

[FarmerHamilton]

Dairy payout lift tipped as world prices up 4.9pc (+graphic)

By Jamie Gray 9:00 AM Wednesday Jul 17, 2013

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A higher dairy payout is being tipped after a big increase in world dairy prices in the latest overnight auction. Photo / NZ Herald


Dairy farmers could be looking at another record year for profit in 2013-14 after a 4.9 per cent rise in GlobalDairyTrade prices was recorded at the overnight auction, banks said.
Prices for whole milk powder - the most important line for New Zealand producers - were up by 7.7 per cent from the last auction at US$5,058 a tonne.
ANZ Bank said prices gained as buyers scrambled to refill their inventory after last summer's drought and a seasonal low in New Zealand supply, which would put upward pressure on Fonterra's $7 per kg of milksolids milk price payout forecast for this season.
"The lower New Zealand dollar and higher-than-expected prices will raise the prospects of Fonterra lifting their initial May forecast of a $7 per kg milk price for 2013-14," ANZ said in a commentary.
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"If mother nature plays nicely and farmers remain disciplined with their expenditure, then this could deliver a new record for profit in 2013-14," the bank said.
The Bank of New Zealand said the auction was "a very positive result" given the already high level of prices. "Restricted offshore dairy supply remains a key driver," BNZ said in a commentary.
"The upshot is there is now clear upside risk on Fonterra's current season milk price payout," the bank said.
See full results from the auction here.
This morning's GDT dairy auction gave the New Zealand dollar a lift, with the currency last trading at US78.95c from US78.28c in late local trading on Tuesday.
But the Kiwi remains well down from this year's peak of US86.75c in April and its record post float high of US88.43c in August 2011.
Rabobank, in its latest quarterly rural confidence survey released earlier this week, said the sharp drop in the value of the New Zealand dollar and a swift end to last summer's drought had significantly improved the outlook for farmers.
- APNZ

[FarmerHamilton]

The lack of interest in this is very re-assuring , makes me assume no one has it !!

[FarmerHamilton]

Lists Tuesday 11.00am

[goldfish]

Looking forward to this one, i did really good from fonterra and have high hopes, i have freed up some cash for tuesday and will buy on market. If it was oversubscribed like i heard and with that big oseas dairy company getting a lot the only way is up for the immediate term. Will see what the trend is first but can only see upwards in the short term. Not going to invest just trade short term. Good luck to all.

[baller18]

Looking forward to this one, i did really good from fonterra and have high hopes, i have freed up some cash for tuesday and will buy on market. If it was oversubscribed like i heard and with that big oseas dairy company getting a lot the only way is up for the immediate term. Will see what the trend is first but can only see upwards in the short term. Not going to invest just trade short term. Good luck to all.

I would be careful on this one, yes it was oversubscribed but still don't understand why the price was set so low..

[1leon]

Looking forward to this one, i did really good from fonterra and have high hopes, i have freed up some cash for tuesday and will buy on market. If it was oversubscribed like i heard and with that big oseas dairy company getting a lot the only way is up for the immediate term. Will see what the trend is first but can only see upwards in the short term. Not going to invest just trade short term. Good luck to all.

You seem to have declared your tax position! The interesting question might be where the buying pressure will come from with 3 companies having entrenched positions one with legal control and the 3 together having over 50% of the shares. There might seem little prospect for upside on the basis of a future takeover and the main reason to buy would be belief that future dividends will be as high as the (agressive?) forecasts. In the meantime the dairy payout i.e. cost to Synlait, is rising.

[goldfish]

Im hopeing the buying pressure will be from people wanting exposure to the dairy industry whom missed out or got less allocation in ipo.

[goldfish]

I would be careful on this one, yes it was oversubscribed but still don't understand why the price was set so low..

No im unsure of that either...anyone? I dont think its necessarily a negative though.

[percy]

I am looking to adding to my wife's and my own holding.
May buy half of what I want "at market open" at 11am Tuesday.
Then see where they are before buying the other half of what I want.
Will speak to my broker on Tuesday morning and seek his thoughts.

[CJ]

Im hopeing the buying pressure will be from people wanting exposure to the dairy industry whom missed out or got less allocation in ipo.

This is what I would have though but what would I know - I backed MRP and WYN!